Micron (MU) Believes SanDisk (SNDK) Pre-Announcement Related to Pricing Pressure, Not Demand - Needham & Company

Needham & Company analyst Rajvindra Gill reiterated a Strong Buy rating and $60 price target Micron Technology (NASDAQ: MU) after hosting VP of Investor Relations, Kipp Bedard at the Needham 17th Annual Growth Conference. The analyst was able to discern more information in the wake of yesterday's SanDisk negative pre-announcement.

"Micron believes the NAND market saw pricing pressure over the last few months caused by Samsung, specifically in client SSDs with an attempt to shift capacity away from its mobile handsets to PCs," Gill said. "NAND pricing over the last four weeks has stabilized, however, and demand trends remain strong. For 2015, on the DRAM side, mobile is expected to be a large driver of DRAM consumption as more phones utilize 4Gb, and NAND growth is expected to be driven by growth in embedded and eMCP. Micron is also making progress toward TLC and 3D NAND, with the former expecting shipments this spring and the latter in 2H15."

"Micron believes the issues noted in SNDK's pre-announcement were related to pricing pressure from Samsung, and not demand. Samsung is clearing excess inventory by shifting capacity away from mobile to PCs in reaction to its own weak handset sales which are not consuming as much memory as in the past. We believe pricing over the last four weeks, however has stabilized. In addition, Samsung has ceased the price cuts and has stopped component builds in the supply chain in 1H15 as it gets ready to support Apple's next iPhone in 2H15 - i.e. NAND, DRAM and logic. We think Samsung most likely won the NAND slot against SNDK for the next iPhone version."

For an analyst ratings summary and ratings history on Micron Technology click here. For more ratings news on Micron Technology click here.

Shares of Micron Technology closed at $31.66 yesterday.

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